Facts:The plaintiff provided ship repair and maintenance services to the defendant vessel. The plaintiff had provided an estimate outlining the work to be done and the defendant accepted that estimate. The estimate included various terms, none of which referenced interest on overdue amounts. The plaintiff sent several invoices all of which were “DUE UPON RECEIPT” but which again, did not reference interest. The plaintiff led contradicted evidence of an oral agreement that interest of US$100,000 would be paid. The defendant brought this application for a determination that no interest was owed.
Decision:$35,000 in interest is owing.
Held:The interest alleged to be owing represents an interest rate in excess of 60% per annum and is therefore a criminal rate of interest under the Criminal Code. In these circumstances, an appropriate interest rate is 5% per annum as provided by the Interest Act which works out to $35,000.
Note: This judgment was overturned on appeal to the Court of Appeal, 2017 FCA 184. The appeal judgment has not yet been summarized.